I did not collect TCS but my buyer has filed his return and paid the tax. Am I still an assessee in default, and what interest do I owe?
The first proviso to s.206C(6A) says a person responsible for collecting tax under sub-section (1) or sub-section (1C) who fails to collect is not to be deemed an assessee in default if the buyer or licensee or lessee has furnished his return of income under s.139, has taken the amount into account in computing income in that return, and has paid the tax due on the income declared — and the collector furnishes a certificate to that effect from an accountant in the prescribed form. Rule 37J prescribes that certificate as Form 27BA, to be furnished to the Director General of Income-tax (Systems) or his authorised person in the procedures, formats and standards that officer specifies.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, ss.206C(6A) and 206C(7), the latter as substituted with effect from 1 April 2025; Income-tax Rules, 1962, Rule 37J; Form 27BA. It bears on section 206C(6A), section 206C(7), section 206C(1), section 206C(1C), section 221, section 139, section 288(2), section Rule 37J of the Income Tax Act 1961, in TDS Defaults, Demand, Recovery & Stay and Penalty matters.
Escaping the principal demand does not escape interest, and the interest provision was rewritten. Section 206C(7) now carries two rates: one per cent for every month or part of a month on the tax from the date it was collectible to the date it is collected, and one and one-half per cent for every month or part of a month from the date it was collected to the date it is actually paid. Before that substitution the sub-section carried a single one per cent rate from collectible to paid — footnote 37 on the departmental page records the substitution by Act No. 15 of 2024 with effect from 1 April 2025. The first proviso to s.206C(7) then fixes the end point for a collector saved by the s.206C(6A) proviso: interest runs from the date the tax was collectible to the date of furnishing of the return of income by the buyer or licensee or lessee. Two limits matter. First, the s.206C(6A) first proviso is worded for sub-sections (1) and (1C) only, and does not on its face reach sub-section (1F), (1G) or (1H). That confinement is itself an amendment, and the date matters: the departmental page stamped Year 2018 prints the same proviso opening "any person responsible for collecting tax in accordance with the provisions of this section", with no restriction to particular sub-sections. So a collector arguing the proviso for an older year is arguing on wider words than the ones now printed, and should read the version in force for his year rather than the current one. The date on which the words were narrowed was not established this pass. Second, the immunity is not automatic — the Chennai Tribunal in Sri Jayabharath Timber Depot refused it where Form 27BA was obtained seven years after the default, holding that the exercise must be done within a reasonable time. The second proviso to s.206C(6A) is a separate protection: no penalty under s.221 unless the Assessing Officer is satisfied that the person failed to collect and pay without good and sufficient reasons.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 206C(6A) deems a person who does not collect the whole or part of the tax, or who after collecting fails to pay it, to be an assessee in default in respect of the tax. The first proviso removes that deeming for a collector under sub-section (1) and sub-section (1C) where the buyer or licensee or lessee (i) has furnished his return of income under section 139, (ii) has taken into account such amount for computing income in such return of income, and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. The second proviso bars penalty under section 221 unless the Assessing Officer is satisfied that the person has without good and sufficient reasons failed to collect and pay the tax. Section 206C(7) as printed makes the person liable to simple interest '(a) at the rate of one per cent for every month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which such tax is collected; and (b) at the rate of one and one-half per cent for every month or part thereof on the amount of such tax from the date on which such tax was collected to the date on which such tax is actually paid', the interest to be paid before furnishing the quarterly statement for each quarter under sub-section (3). Its first proviso fixes interest for a collector not deemed in default under the first proviso to sub-section (6A) as payable from the date the tax was collectible to the date of furnishing of return of income by the buyer or licensee or lessee; its second proviso requires interest to be paid in accordance with the Assessing Officer's order where an order is made for the default under sub-section (6A). Rule 37J, headed 'Form for furnishing certificate of accountant under the first proviso to sub-section (6A) of section 206C', requires the certificate to be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by him, in the procedures, formats and standards specified under sub-rule (2). 'Accountant' is defined in Explanation clause (a) to s.206C by reference to the Explanation to s.288(2).
A collector under s.206C(1) or (1C) who has not collected is not an assessee in default where the buyer has returned the amount and paid the tax and an accountant's certificate in Form 27BA is furnished; interest nevertheless runs, and under the first proviso to s.206C(7) it runs to the date the buyer furnished his return. From 1 April 2025 s.206C(7) carries two rates — one per cent per month to the date of collection and one and one-half per cent per month from collection to payment — in place of the earlier single one per cent rate running from collectible to paid.
Not applicable — this is a statement of the statutory and rule text as printed on the departmental pages, with the amendment history taken from the footnote apparatus on the section page.
Provided that in case any person responsible for collecting tax in accordance with the provisions of this section, fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee but is not deemed to be an assessee in default under the first proviso of sub-section (6A), the interest shall be payable from the date on which such tax was collectible to the date of furnishing of return of income by such buyer or licensee or lessee:
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Handle my notice → Ask a CA on WhatsAppThe first proviso to s.206C(6A) says a person responsible for collecting tax under sub-section (1) or sub-section (1C) who fails to collect is not to be deemed an assessee in default if the buyer or licensee or lessee has furnished his return of income under s.139, has taken the amount into account in computing income in that return, and has paid the tax due on the income declared — and the collector furnishes a certificate to that effect from an accountant in the prescribed form. Rule 37J prescribes that certificate as Form 27BA, to be furnished to the Director General of Income-tax (Systems) or his authorised person in the procedures, formats and standards that officer specifies. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 206C(6A), section 206C(7), section 206C(1), section 206C(1C), section 221, section 139, section 288(2), section Rule 37J of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, ss.206C(6A) and 206C(7), the latter as substituted with effect from 1 April 2025; Income-tax Rules, 1962, Rule 37J; Form 27BA. Escaping the principal demand does not escape interest, and the interest provision was rewritten. Section 206C(7) now carries two rates: one per cent for every month or part of a month on the tax from the date it was collectible to the date it is collected, and one and one-half per cent for every month or part of a month from the date it was collected to the date it is actually paid. Before that substitution the sub-section carried a single one per cent rate from collectible to paid — footnote 37 on the departmental page records the substitution by Act No. 15 of 2024 with effect from 1 April 2025. The first proviso to s.206C(7) then fixes the end point for a collector saved by the s.206C(6A) proviso: interest runs from the date the tax was collectible to the date of furnishing of the return of income by the buyer or licensee or lessee. Two limits matter. First, the s.206C(6A) first proviso is worded for sub-sections (1) and (1C) only, and does not on its face reach sub-section (1F), (1G) or (1H). That confinement is itself an amendment, and the date matters: the departmental page stamped Year 2018 prints the same proviso opening "any person responsible for collecting tax in accordance with the provisions of this section", with no restriction to particular sub-sections. So a collector arguing the proviso for an older year is arguing on wider words than the ones now printed, and should read the version in force for his year rather than the current one. The date on which the words were narrowed was not established this pass. Second, the immunity is not automatic — the Chennai Tribunal in Sri Jayabharath Timber Depot refused it where Form 27BA was obtained seven years after the default, holding that the exercise must be done within a reasonable time. The second proviso to s.206C(6A) is a separate protection: no penalty under s.221 unless the Assessing Officer is satisfied that the person failed to collect and pay without good and sufficient reasons. If it applies to you, the first step is this: Get the accountant's Form 27BA moving as soon as the short collection is noticed — the immunity has been refused for delay, not for the form's contents.
Section 206C(6A) deems a person who does not collect the whole or part of the tax, or who after collecting fails to pay it, to be an assessee in default in respect of the tax. The first proviso removes that deeming for a collector under sub-section (1) and sub-section (1C) where the buyer or licensee or lessee (i) has furnished his return of income under section 139, (ii) has taken into account such amount for computing income in such return of income, and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. The second proviso bars penalty under section 221 unless the Assessing Officer is satisfied that the person has without good and sufficient reasons failed to collect and pay the tax. Section 206C(7) as printed makes the person liable to simple interest '(a) at the rate of one per cent for every month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which such tax is collected; and (b) at the rate of one and one-half per cent for every month or part thereof on the amount of such tax from the date on which such tax was collected to the date on which such tax is actually paid', the interest to be paid before furnishing the quarterly statement for each quarter under sub-section (3). Its first proviso fixes interest for a collector not deemed in default under the first proviso to sub-section (6A) as payable from the date the tax was collectible to the date of furnishing of return of income by the buyer or licensee or lessee; its second proviso requires interest to be paid in accordance with the Assessing Officer's order where an order is made for the default under sub-section (6A). Rule 37J, headed 'Form for furnishing certificate of accountant under the first proviso to sub-section (6A) of section 206C', requires the certificate to be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by him, in the procedures, formats and standards specified under sub-rule (2). 'Accountant' is defined in Explanation clause (a) to s.206C by reference to the Explanation to s.288(2). The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A collector under s.206C(1) or (1C) who has not collected is not an assessee in default where the buyer has returned the amount and paid the tax and an accountant's certificate in Form 27BA is furnished; interest nevertheless runs, and under the first proviso to s.206C(7) it runs to the date the buyer furnished his return. From 1 April 2025 s.206C(7) carries two rates — one per cent per month to the date of collection and one and one-half per cent per month from collection to payment — in place of the earlier single one per cent rate running from collectible to paid.
Not applicable — this is a statement of the statutory and rule text as printed on the departmental pages, with the amendment history taken from the footnote apparatus on the section page. In the words reproduced by the source cited on this page: "Provided that in case any person responsible for collecting tax in accordance with the provisions of this section, fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee but is not deemed to be an assessee in default under the first proviso of sub-section (6A), the interest shall be payable from the date on which such tax was collectible to the date of furnishing of return of income by such buyer or licensee or lessee:"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, ss.206C(6A) and 206C(7), the latter as substituted with effect from 1 April 2025; Income-tax Rules, 1962, Rule 37J; Form 27BA. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 206C(6A), section 206C(7), section 206C(1), section 206C(1C), section 221, section 139, section 288(2), section Rule 37J, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A collector under s.206C(1) or (1C) who has not collected is not an assessee in default where the buyer has returned the amount and paid the tax and an accountant's certificate in Form 27BA is furnished; interest nevertheless runs, and under the first proviso to s.206C(7) it runs to the date the buyer furnished his return. From 1 April 2025 s.206C(7) carries two rates — one per cent per month to the date of collection and one and one-half per cent per month from collection to payment — in place of the earlier single one per cent rate running from collectible to paid. It arises in TDS Defaults, Demand, Recovery & Stay and Penalty matters, on section 206C(6A), section 206C(7), section 206C(1), section 206C(1C), section 221, section 139, section 288(2), section Rule 37J of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prove all three conditions separately for each buyer: the return under s.139, the amount taken into account in computing income in that return, and the tax due on the declared income actually paid. A certificate that asserts only that the buyer filed a return does not meet the proviso. Check that your default is under sub-section (1) or (1C). If the demand is under s.206C(1F), (1G) or (1H), the first proviso to s.206C(6A) does not by its terms apply and you will have to argue for it rather than assume it — but check the version in force for your year first, because the proviso once read "in accordance with the provisions of this section" without any restriction. Recompute interest on the two-rate basis for any period on or after 1 April 2025: one per cent to the date of collection and one and one-half per cent from collection to payment. A demand that applies a flat one per cent throughout to such a period is computed on the superseded text. Where the s.206C(6A) proviso is satisfied, insist that interest stops at the date the buyer furnished his return, under the first proviso to s.206C(7) — Assessing Officers often run it to the date of the order. Take the s.221 point separately: the second proviso to s.206C(6A) bars penalty unless the officer records satisfaction that there was no good and sufficient reason.
Still good law. Sub-sections (6A) and (7) were read on two departmental pages stamped Year 2025 and Year 2026 which print them identically. No Finance Act text was retrieved this pass. Rule 37J could not be dated because the departmental rule page carries no year stamp. Any interest computation applying a flat one per cent per month from the date the tax was collectible to the date it was paid, for a period on or after 1 April 2025, is on the superseded text. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-sections (6A) and (7) were transcribed in full this pass from https://incometaxindia.gov.in/w/section-206c-39 (Year: 2026) and independently from https://incometaxindia.gov.in/w/section-206c-36 (Year: 2025); the two pages print identical text, including both provisos to each sub-section. Rule 37J was transcribed from https://incometaxindia.gov.in/w/rule-37j; that RULE page carries NO 'Year:' stamp, so the rule could not be dated and this entry does not claim to have dated it. The dating of the s.206C(7) rewrite rests on footnote 37 printed on the -36 page: 'Sub. for "interest at the rate of one per cent per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid and such interest shall be paid" by Act No. 15 of 2024, w.e.f. 1-4-2025.' The departmental footnotes give Act numbers only; the correspondence of Act No. 15 of 2024 to the Finance (No. 2) Act 2024 was NOT verified from a source read this pass. Form 27BA itself was not retrieved, so nothing is said about its contents beyond what Rule 37J and the proviso state. Whether the s.206C(6A) first proviso can be read across to sub-sections (1F), (1G) and (1H) is stated as an open point on the text; no decision on it was located this pass. The substitution of sub-section (7) was independently corroborated this pass against https://incometaxindia.gov.in/w/section-206c-37 (Year: 2018), headed "Income-tax Act, 1961" and "Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc", which prints sub-section (7) with the single one per cent rate in exactly the words footnote 37 quotes as substituted, and with only one proviso. That page also prints the first proviso to sub-section (6A) opening "in accordance with the provisions of this section", establishing that the present confinement to sub-sections (1) and (1C) is a later narrowing; the date of that narrowing was not established this pass and is not stated. The date in 'decided_on' is the date from which the position stated takes effect, not a decision date. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A collector under s.206C(1) or (1C) who has not collected is not an assessee in default where the buyer has returned the amount and paid the tax and an accountant's certificate in Form 27BA is furnished; interest nevertheless runs, and under the first proviso to s.206C(7) it runs to the date the buyer furnished his return. From 1 April 2025 s.206C(7) carries two rates — one per cent per month to the date of collection and one and one-half per cent per month from collection to payment — in place of the earlier single one per cent rate running from collectible to paid.
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